A note of caution on the current Rolex market

[Driver8]

I realise this will be something of "shout at the hurricane" post on my part, but I just thought I'd post this after seeing some prices on C24 that are absolute lunacy.

For example -
£40k for a NOS bog standard 116610LV
£60K for a NOS Omani-engraved 116610LV
£75K for new UAE-engraved 116500LN
£775k for a new 116595RBOW
etc.

I know many of you believe (or at least want to believe) that prices will carry on increasing forever unchecked, that this situation isn't a bubble, and that it's somehow a "new normal", etc, so I thought I'd just try to be a voice of caution once again.

Below is a graph of a typical economic bubble. This graph is pretty well known as a general economic/investment model, and has been around for years (so it's not been created to match the current Rolex situation to date).



Now, while this graph is not directly related to Rolex watches, you only need to take a cursory glance at it to recognise the parallels. Only a fool would try to claim we are currently in anything other than the Mania Phase at the moment. Notice how that section of the graph is also denoted as "Public" - again, exactly mirroring what's happening now - i.e. the public at large (many with zero previous interest in watches) have suddenly become aware of soaring prices and have blindly jumped on board thinking only of the dollar signs.

We have clearly been through the 'Media Attention' (i.e. social media) stage, we have seen 'Enthusiasm' whereby people took advantage of that attention and speculated a little with their asking prices. I think we've been in the 'Greed' stage for some time, especially in certain grey market quarters, and now I think we're plunging headlong into the 'Delusion' phase with some of the insane prices being asked at the moment. And then of course there are those who already talk about "the new normal".... which is just another way of saying the 'New Paradigm'. Take from that what you will....

Another thing to note is how many people like to say that prices have always gone up over time... and that's absolutely true as long as you take a long enough time horizon. Rolex prices have indeed tended to follow the dotted Mean line on the graph, in much the same way as the housing market - i.e. over a long enough period, the mean trajectory is always one of gradual growth.... but with various booms and busts along the way.

Of course I don't expect to change any hearts and minds with this post, and the timescales for each phase aren't remotely set in stone. However I think most people should be able see the parallels between this graph and the current Rolex situation. So my advice would be to just exercise a modicum of caution.... and don't say I didn't warn you!

[1665fan]

Saw this last year…..yawn…..prices will settle down the next economic crash…that’s it

[Driver8]

Originally Posted by 1665fan

Saw this last year…..yawn…..prices will settle down the next economic crash…that’s it

Well good for you (yawn), but judging by some of the beliefs on here, a lot of people apparently haven't ever considered it.

[Locust]

6.5 mil for a blue watch. Absolutely in the delusion phase

[SubMillennial]

[1665fan]

Originally Posted by SubMillennial

[subtona]

Word to the wise

[Santiago32]

Can’t wait to buy a YG Daytona with no hoops to jump through or gray premiums.

[just1time]

Putting inflation aside, I don't think this is factoring the amount of "new" money in the world...This trend won't die off easily without something catastrophic happening and forcing it.

[SaintMickey]

It's interesting but without "Years" in the bottom "Time" line its not really actionable or anything I can do with or about it.

I've never come near the "greed" plateau or bought a $33k Daytona or an overpriced BLRO so...I don't feel sorry for those caught in between the green and delusion stages.

Until then I will not worry about the value of my watches, I will always only buy at or below MSRP and I will wear the snot out of them.

I guess I know why I won't pull the trigger on a used Daytona that is selling over its original MSRP!

Qu'ils mangent de la brioche !

[Jerrocop]

Can't wait for demand to lessen. In the meantime, there are plenty of other watch brands to drool over and add to the collection. I'm trying to have fun with this hobby rather than complain or bug my AD incessantly. Rolex is awesome and I certainly love the one I have but there are other watches out there that are cool too.

[nosignalbmwdriver]

LOL bro reaching

[SaintMickey]

And its not just "Rolex" all the "big brands" have models that are silly even a plain Jane VC Overseas 3 hander MSRP $22k...$53,477
https://www.chrono24.com/vacheroncon...id21232853.htm

Or how about a $9000 Speedmaster with a dog on it! $48-$52k.

https://www.google.com/shopping/prod...a9QAawQ9pwGCAs

https://www.ebay.com/itm/27504984276...xoC7t4QAvD_BwE

[Slimpee]

Originally Posted by just1time

Putting inflation aside, I don't think this is factoring the amount of "new" money in the world...This trend won't die off easily without something catastrophic happening and forcing it.

See “New paradigm” and “Denial”

🤣

[Ensign]

I dunno - has the price of diamonds or gold gone down over the years?

Maybe Rolex is a modern form of gold. Gold doesn’t decay and is universally recognizable. Rolex last more than a lifetime; longer if a safe queen. The brand is almost as well known as gold.

[ronricks]

Originally Posted by SubMillennial

[SaintMickey]

There will be two camps here.

Those that have bought OVERPRICED and those who have not. Should be fun to hear the theories and arguments.

[Harry-57]

This pattern may well apply to the luxury watch market. It certainly can't and won't stay as it is, which appears to be a continuous up trend, with the odd wiggle, although Christmas usually pumps it a bit. The question that no one can answer is the scale along the x axis. It could be months, years, decades, even generations.

The market has been through some big swings in the 100 and some years that Rolex have existed. So far, some twists and turns aside, Rolex watches seem to have been relatively strong retainers of value compared to original MSRP. Sometimes exceeding MSRP, sometimes not, but retaining more value than most other brands. I doubt that will change much. But who knows?

[greeneyedguy]

If you think in terms of emerging industry and productivity then society as we know it is in the throws of the roaring times. Overnight millionaires abound are jumping into the watch game every day. Either your riding the wave of technological evolution or your getting swept up. Things like crypto are becoming interwoven into the global financial system as we speak and there is enough productivity to keep the watch game rollin to new heights for years to come.

[shaunylw]

Until real estate prices return to any sort of normalcy, i believe Rolex will continue to climb. Prices shocked me two years ago and now i feel like i am used to the absurdity. When a black ceramic Daytona hits 50k next year, it will not surprise me. At some point it will soften and stop climbing but i don’t ever foresee a time where it returns to “normal”. I don’t foresee a time it returns to even slightly over MSRP.

Younger folks are making absurd amounts of money on crypto and too many people want Rolex for the wrong reasons (investments). Grey sellers pump the price up by passing them back and forth, so this cycle will continue. If a pandemic can’t stop the climb, the fed raising the rate or market pullback isn’t going to stop it either IMO.

[azs.77]

Luxury brands are on an upward trend in general. The ‘affordability’ of Rolex as a luxury watch along with some excellent marketing has propelled it into a different trajectory. Considering Rolex thinks decades/century ahead, the decreased supply makes sense.


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[Jaypremium]

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[teck21]

When do you foresee this bubble bursting and giving way to Fear and Capitulation?


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[WatchNutcase]

The problem is the second prices decrease a little, or there's just a tad more availability at the AD there's still a lineup of thousands of buyers for essentially every Rolex model. These buyers aren't going away anytime soon, which makes it hard to believe that any price drops will be long lived. It's a ridiculous situation and really is frustrating for all of us.

[SubMillennial]

Originally Posted by WatchNutcase

The problem is the second prices decrease a little, or there's just a tad more availability at the AD there's still a lineup of thousands of buyers for essentially every Rolex model. These buyers aren't going away anytime soon, which makes it hard to believe that any price drops will be long lived. It's a ridiculous situation and really is frustrating for all of us.

Or it opens the floodgates as greys start panicking and liquidating their inventory to avoid holding the bag, with a lot of previous speculators staying away to avoid catching a falling knife.

[77T]

Just like a broken watch is right twice a day, bust predictions come true in time.

What I see in the current market is people buying at inflated prices - many are in a high DTI - and into risky investing schemes. Those will wash out in a correction.

I also see high-wealth buyers who want the best money can buy - and they’ve settled on Swiss watches as a form of “see what I have”. They’ll do fine.

Bust? Sure one day, but for the rest of average collectors it’s “c'est la vie” for now.


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[1lastone]

Interesting post. I’d say I started buying around the “awareness” phase - always wanted one but coincided with the time l had the means (DJ 36 blue at MSRP and explorer 36 before values almost doubled. I made one purchase (pre ceramic Pepsi) probably somewhere between bear trap and media attention. I know I paid a premium but overall it was still worth it to me as I love the watch. I’m glad I don’t have a desire for any more Rolex and instead am chasing unloved Patek references. The Tiffany nautilus going for 6.5$M really made me wonder if this hobby is for me anymore, starting to feel a bit like tulip mania. Ok people out there will say why it’s worth it but i won’t be convinced. Anyway thanks for sharing

[arcampado]

Originally Posted by shaunylw

Until real estate prices return to any sort of normalcy, i believe Rolex will continue to climb. Prices shocked me two years ago and now i feel like i am used to the absurdity. When a black ceramic Daytona hits 50k next year, it will not surprise me. At some point it will soften and stop climbing but i don’t ever foresee a time where it returns to “normal”. I don’t foresee a time it returns to even slightly over MSRP.

Younger folks are making absurd amounts of money on crypto and too many people want Rolex for the wrong reasons (investments). Grey sellers pump the price up by passing them back and forth, so this cycle will continue. If a pandemic can’t stop the climb, the fed raising the rate or market pullback isn’t going to stop it either IMO.

Well stated. I believe this to be a plausible synopsis.

[Craigdwh]

I just avoid the madness and support brands that are available at nice discounts.

Tudor
Glashutte Original
Gerard Perregaux
Zenith
JLC
Tag Heuer
Blancpain

Just to name a few that make up my collection.



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[nollie85]

ALL I repeat ALL asset prices have increased dramatically.

* Real Estate in pretty much the top 20 countries have skyrocketed. We are seeing 20%+ growth in many countries just in 2021 alone. Some real estate I'm looking at here in Brisbane and Sydney have doubled!!! Literally doubled from their 2019 prices.
* High end cars are insane. Some ppl asking $300k+ for a G63 AMG. Dont even start talking about Porsche and Ferrari.
* Luxury items like certain bags and other fine things in life are also surging.

Pretty much any asset that has some value has gone up. Heck even basic Toyota Corolla cars are costing the same used as they are brand spanking new.

Governments around the world have printed trillions and trillions of dollars recently. Everyone is cashed up and your $500 back in 2020 is not worth $500 today. Much much less. Hence the growth in all asset prices.

Todays price will be the normal price going forward.